Abu Dhabi Shares Rise to 5-Month High on Etisalat Dividend Plan

Feb. 21 (Bloomberg) -- Abu Dhabi’s shares rose to the
highest in almost five months after Emirates Telecommunications
Corp. proposed a dividend for 2011 and on investor bets the
sheikhdom’s spending plans will support real-estate companies.

Emirates Telecommunications, the United Arab Emirates’
biggest phone company known as Etisalat, jumped the most this
month. Sorouh Real Estate Co., the emirate’s second-largest
developer, advanced 1.8 percent. Abu Dhabi’s ADX General Index
rose 0.9 percent to 2,527.04, the highest since Oct. 2, at the 2
p.m. close in the emirate. The Bloomberg GCC 200 Index gained
0.8 percent.

“Buying momentum has been driven by real-estate stocks
after the government announced spending plans last month” and
Etisalat was the driving force today, said Sebastien Henin, who
helps oversee $100 million at The National Investor in Abu
Dhabi. Etisalat has the heaviest weighting on the benchmark.

Shares in the U.A.E. capital are climbing as the oil-rich
emirate transforming itself into a business and cultural hub
unveiled plans last month to resume projects, including branches
of the Louvre and Guggenheim museums, after reviewing their
viability. Abu Dhabi’s benchmark index has gained 3 percent this
month, while the sheikhdom’s real-estate measure has soared 21
percent.

Etisalat rose the most since Jan. 29 to 9.52 dirhams. The
board proposed a dividend of 60 fils for 2011, the same amount
it paid for 2010. The phone company also said it may outsource
some operations as part of a plan to lower costs after posting a
decline in 2011 profit. The shares have gained 4.3 percent this
year.

’Overreacted’

Sorouh climbed to 1.11 dirhams, the highest close since
Sept. 22. The company last week said 2011 profit surged as
income from rentals and housing projects rose.

Dubai’s benchmark DFM General Index gained 1.7 percent to
1,596.26, the highest since June 19. The measure is up 18
percent in 2012.

“The market will probably stabilize in the coming days as
investors have overreacted,” Henin said.

Rents in Abu Dhabi will drop further this year as property
supply outstrips demand, said real-estate consultant CB Richard
Ellis Group Inc. U.A.E. property markets suffered more than
others in the Middle East with the onset of the global credit
crisis. Since September 2008, Dubai house prices slumped more
than 60 percent and the cost of residential real estate in the
capital, Abu Dhabi, dropped by half as banks curbed mortgage
lending and speculators fled.

About 176 million shares traded in Abu Dhabi today,
compared with a 12-month daily average of about 65 million
shares.